Meeting Long Term Care Needs with Insurance
8/30/2010 @ 7:56:PM By Maureen Lyons
In the previous post, we discussed Medicare’s limitations in covering long term care needs. There are several options available, each differing in terms of coverage and complexity. These alternatives are all part of a comprehensive life care planning and wealth management strategy.
Here are two basic options available:
Self-insurance for possible long term care expenses. This requires a close collaboration of financial planning and estate and tax professionals to ensure that there are enough assets available to cover possible costs for as long as needed. This requires a comprehensive look at the overall financial condition of the senior, as well as a thorough understanding of the person’s health and wishes regarding care in the event of incapacity. The main consideration is to create an investment strategy that will produce asset growth and income sufficient to fund the individual’s long term care expenses
When working with an advisor, detailed information will be needed for the initial analysis. This will included client assets, current and anticipated income and expenses, and other data, such as where care will occur, the level of support available from family caregivers, and any family history of incapacity. This information will provide the foundation for the planning required to maximize the value of Social Security income, fixed pensions, dividend, interest, and other income streams, as well as maximizing tax deductions for such things as medical expenses.
Long term care insurance. The majority of seniors may not be able to fully self-insure for their long term care needs. Those who cannot but are insurable and can afford the premiums should integrate a long term care policy into their comprehensive wealth plan.
There are two types of policies available: (a) cash payment, and (b) reimbursement. The former pays cash to the insured. The latter reimburses the insured for actual costs incurred.
Policy benefits to consider in a long term care policy include: nursing home and home care coverage; sufficient daily payouts; elimination periods (the number of days you must be in a nursing home before benefits begin, typically 0 to 100 days); duration of benefits; renewability; waiver of premiums (insured pays no premiums while receiving benefits); and inflation protection.
In a future post, we will discuss some of the “advanced” methods available for long term care planning, such as the “Medicaid” trust and other asset protection strategies.
Posted Under: Care Coordination, Comprehensive Estate Planning, Estate Planning, Life Care Planning
Tags: , Healthcare, LifeCare, long term care, Planning, seniors